The Corruption Eradication Commission, or KPK, building reflected in a window with an Indonesian national flag. The case against Joost Lino, who has been arrested, is far from clear. Photo: AFP/Bay Ismoyo

JAKARTA – “I am appalled, heart-broken and astonished that the country for which my father has done so much to strengthen the economy is now treating him so unjustly,” writes Clarissa Lino in an emotional defense of her father, the former boss of state-run port operator PT Pelindo Pelabuhan Indonesia (PPII).

Last week, the Anti-Corruption Commission (KPK) finally arrested the highly-regarded 67-year-old executive Joost Lino, five long years after he was declared a suspect for allegedly causing as much as US$3.6 million in state losses in the purchase of three dockside container cranes.

But to the puzzlement of Lino and anti-graft activists, the losses now appear to have been reduced to a paltry $22,828 and are related not to the purchase price, but to maintenance costs – a field that was never the purview of the company’s chief executive.

Far from being yet another example of the bribery and corruption that continues to plague Indonesia at all levels of government, the KPK case against Lino has at no point alleged that he enriched himself from the deal – the prerequisite needed to support the charge.

Stranger still, KPK deputy chairman Alexander Marwata acknowledges that the obstacle to Lino’s prosecution has been the failure of the State Audit Agency (BPK) to produce the actual documentation necessary to calculate the extent of the supposed loss.

Instead, the KPK is now relying on “experts” from the Bandung Institute of Technology (ITB) to determine the pricing issues around the three cranes, which were built for the feeder ports of Palembang, Panjang and Pontianak in Sumatra and Kalimantan.

Why the case has been pursued for so long is difficult to comprehend, more so because the revised 2019 KPK Law now allows the commission to drop an investigation when previously it was prevented from doing so because of a rule put in place to prevent bribery.

‘Collateral damage’

Only last month, the KPK used that mechanism for the first time to acquit Singapore-domiciled billionaire Syamsul Nursalim and his wife, who had been accused of misusing funds from the government’s $43 billion bailout scheme introduced in the wake of the 1997 financial crisis.

Sources familiar with the Lino case believe Lino became what one called “collateral damage” in behind-the-scenes moves by powerful figures to find a pretext to remove State Enterprise Minister Rini Soemarno from President Joko Widodo’s first-term cabinet.

One former KPK commissioner says he suspects investigators may have detained Lino now to bring proceedings to a point where it can avoid the embarrassment of dropping the case itself by getting the court to throw it out for lack of evidence.

If anything, the long-running saga does underline the inherent danger that exists when an impatient, but well-meaning state enterprise executive attempts to cut bureaucratic corners in the interest of getting things done.

Foreign business friends who have known Lino since the 1970s refuse to believe he is crooked. “It’s not about the cranes,” an Australian industry source told Asia Times. “It’s a way of getting at him because he upset too many people.”

The case goes back to 2010 when Lino, frustrated that the crane tendering process had dragged on for three years, asked manufacturers Wuxi Huadong Heavy Machinery (HDHM), Shanghai Zhenhua Heavy Industries and South Korea’s Doosan Group to submit new bids.

Ultimately, the $15.55 million contract went to HDHM, a specialist company that subsequently complied with Lino’s request to change the order from single-lift to twin-lift cranes, capable of handling two 20-foot containers simultaneously.

Cars being shipped through Surabaya port in 2015. Photo: AFP/Juni Kriswanto

Costs reduced

Because of the marginal price difference, the deal was reclassified as a direct appointment – and therefore technically illegal – despite the fact that only a month later counterpart PT Pelindo Pelabuhan III paid more for a single-lift crane in Surabaya.

“A case can be made that Lino did not adhere strictly to administrative procedures, but in doing so he made a sound commercial deal that was urgently needed,” says the industry source. “He was there to improve port performance and that’s what he did.”

According to shipping experts, the double-lift crane installed at Pontianak in West Kalimantan reduced the cost of moving a container to Jakarta from Rp6 million ($425) to Rp2.5 million ($176) – a singular achievement in a country where logistical costs make it less competitive than its neighbors.

In fact, by improving port management, Lino earned a well-deserved reputation for reducing maritime costs, and therefore the price of goods in more distant locations, often without the need for central government financing.

“In return, he is now humiliated by his own country and the very institution that should uphold justice and protect his basic rights as a citizen,” daughter Clarissa says in her letter. “It is unbelievable his country … could be so cruel and unjust.” 

As it was, in December 2015, the company’s shareholders dismissed Lino as head of the newly-renamed Indonesia Port Corporation (IPC) after he was indicted by the KPK over the crane transaction.

Without having access to the contract, a British consultant at the time estimated the average cost of each of the three cranes at $6.1 million, well above the price tag of $5.5 million, which included shipping but not maintenance costs.

Lack of evidence

After questioning him for seven hours in February 2016, fully seven weeks after he was declared a suspect, KPK investigators did not detain Lino as might have been expected if they were certain of the weight of evidence against him.

Anti-corruption activists have always been disturbed at the tenuous nature of many losses-to-the-state charges, and the tendency of the lower court system to convict suspects without the evidence to show they actually benefitted from any of the spoils.

The Lino case mirrors that of former Pertamina state oil company president-director Karen Agustiawan, jailed for nine years in 2019 for allegedly causing $40 million in state losses – then acquitted on appeal in the Supreme Court the following year.

In their judgment, largely ignored by the Indonesian media, the court declared that Agustiawan’s decision to invest in an offshore oil block in Australia’s Bass Strait was a normal business transaction and that any losses incurred did not constitute a crime.

That was similar to the fate of Edhie Widiono, the former head of state power utility Perusahaan Listrik Negara (PLN), charged in 2009 with adding $13.8 million to the cost of two generators urgently need for power-starved South Sumatra.

Although he was never accused of enriching himself, police based their case on an interim BKP report drawing attention to the significant difference between what it cost to buy the units and the internet price of the same type of generator.

BKP head Anwar Nasution later cleared Widiono of wrong-doing after learning the price discrepancy was due to the additional costs related to commissioning and installation, insurance payments and the financing of a four-year loan to fund the purchase.

But that was not the end of Widiono’s troubles. In December 2011, he was jailed for five years for directly appointing a company to supply a computerized customer information system. In that, his innocence was apparently not so clear.

Vice President Jusuf Kalla in 2019 with President Joko Widodo (R). Photo: AFP/Anton Raharjo/NurPhoto

Cheaper prices and promises

Cutting corners was the hallmark of former vice-president Jusuf Kalla when he took charge of the Susilo Bambang Yudhoyono administration’s 10,000-megawatt crash power program urgently needed to fill a looming gap in supply on the main Java-Bali grid.

Almost all of the major projects controversially went to Chinese power developers, who were favored over other competitors because of their cheaper pricing and promises of easy access to low-interest financing.

Not only did the Chinese firms use outdated technology, and in some cases second-hand boilers, but they also brought in hundreds of Chinese workers to carry out the construction, which went unnoticed at the time.  

Even then, the program typically ran into so many bureaucratic roadblocks that Yudhoyono was finally forced to issue an unprecedented decree in mid-2009 exempting PLN from having to conduct open bidding for the rest of the plants that had yet to be put up to tender.

Kalla openly encouraged ministers to find loopholes in Indonesia’s “regulation jungle.” As he told one interviewer: “If regulations obstruct, they should be changed, otherwise what would be the difference between me and a grade three civil servant?”

 Lino shared that impatience. But as one of several private sector executives brought in by then-state enterprise minister Sofyan Djalil in 2007-2009 to clean up and improve the management of state-run companies, he made serious enemies.

“A lot of people hated him because of the way he closed down so many corrupt operations as soon as he discovered them,” says one long-time friend. “Lino is totally honest. From what I know, the most expensive gift he ever accepted was a bottle of Scotch.”

Efficiency over revenues

Lino did, in fact, start his career with PPII, joining the team that oversaw the construction of the first two container terminals at Jakarta’s Tanjung Priok port in the 1980s as the Indonesian economy started to boom on the back of oil and gas receipts.

But his campaign against rampant corruption at the port had a price: he was eventually moved out of Tanjung Priok to a non-active post in the directorate-general of sea transport.

Lino finally left the civil service in disgust, only to be snapped up by an Indonesian company to manage the construction of a container terminal at Guigang, one of the busiest ports on China’s south coast.

Coaxed back to PPII in 2007, he told Djalil that when it cost more to ship cargo from Jakarta to Manado in North Sulawesi than to far-off Rotterdam, the country’s shipping industry was in trouble.

The answer, for Tanjung Priok at least, was to prioritize efficiency over revenues at a port that still handles at least 70% of Indonesia’s total exports and almost all of its containers.

One of Lino’s first acts was to end the contracts of many of the port’s 80 stevedoring companies, only reinstating those who could meet his demands for more efficiency.

Coupled with the purchase of more cranes, the result was a vast improvement in handling capacity – from three million to the current eight million containers a year – and a doubling of profits during his five years on the job.

But while those changes reduced the amount of time a ship waited for a berth, it had little impact on the “dwell” time – the days a container stays in port – because of the sluggish inspection practices of customs and the trade and agriculture ministries.

Cargo at the Jakarta International Container Terminal, Tanjung Priok in Jakarta, on February 28, 2021. The JICT port is the largest and most advanced seaport container terminal in Indonesia. Photo: AFP/Anton Raharjo/NurPhoto

Making enemies

Lino made more enemies in 2013, this time over the first phase of the New Priok expansion, which was meant to fall under the responsibility of the port authority, part of the directorate-general of sea transport.

Industry sources say the department’s initial blueprint was made no sense from an engineering viewpoint and that when Lino explained this to then-vice-president Boediono, Kalla’s successor, the port authority’s tender process was withdrawn.

IPC then submitted an alternative $2.5 billion investment plan, which was ultimately accepted because Lino was able to demonstrate, for the first time, that a state enterprise could tackle a major project without central government financing.

Lino also had a running battle with the port’s labor union, which reached a peak in August 2014 when he signed off on a renewal of the Jakarta International Container Terminal (JICT) concession with Britain’s Hutchison Port Holdings.

The new contract made IPC a 51% majority shareholder in JICT, which in turn meant readjusting salaries that in some cases were half as much higher than those that were being paid by IPC.

Sources in the shipping industry agree that Lino did much to professionalize port operations across large parts of the archipelago, but some fault him for “playing in the political arena” and say his often-confrontational style created negative feelings that, in the end, left him with few allies.